Fourth District, Division 1 Questions Validity of Hilltop Decision.
A prevailing alter ego defendant was awarded $134,469.36 out of a requested $353,047.50 in attorney’s fees based on Civil Code section 1717 and the Reynolds case [one of our Leading Cases], but was denied recovery of fees for successfully defending on a fraud claim in a multi-phased trial.
Those determinations were affirmed in Palmer v. Scull, Case No. D057556 (4th Dist., Div. 1 Aug. 29, 2012) (unpublished).
The $134,469.36 award was sustained because plaintiff failed to present an adequate record on appeal and it hardly could be said that the trial judge abused any discretion in granting only a little over a third of the requested fees.
As far as legal challenges, appealing plaintiff relied on Hilltop Investment Associates v. Leon, 28 Cal.App.4th 462 (1994), a decision which declared it a “draw” in an alter ego case in refusing to award fees to alter ego defending litigant. The Palmer court questioned the validity of Hilltop in light of the state supreme court’s Hsu v. Abarra, 9 Cal.4th 863, 875-876 (1995) decision [another of our Leading Cases], which held that an “unqualified win” certainly qualified the prevailing party for fee recovery. Also, Hilltop did not stand for the proposition that a managing director/corporate officer sued individually and prevailing could not be found to be the prevailing party even if the corporation was found liable.
With respect to winner’s attempt to obtain an enhanced fee recovery on the fraud count, this one lacked merit because winner relied on a true indemnity clause, which has been held to not give rise to fees under Carr, Baldwin Brothers, and Campbell (cases which can be found by reviewing posts in our home page category “Indemnity”).